Big Society Capital launched its first annual report last night, which shows it has delivered £39m of capital to 15 social investment finance intermediaries, which have so far benefited 23 frontline organisations.
Speaking to civilsociety.co.uk, Nick O’Donohoe, chief executive of Big Society Capital, said the investments to frontline organisations ranged from charities to community projects, with the finance ranging from £10,000 to £300,000.
In total, Big Society Capital has committed £56m to 20 social investment intermediaries, including seven social impact bond funds, the Social Stock Exchange and renewable-energy funds. Thirteen of the social investment intermediaries financed by Big Society Capital are new to the sector.
Its accounts reveal it made a loss of £1m for the period April to December 2012, but O’Donohoe said he expected that in time Big Society Capital will make a profit: “We expect losses, which are manageable, for at least a couple of years.”
Speaking last night at the launch of the report held at CCLA's offices, O’Donohoe said the demand for social investment was “growing rapidly” with demand from charities for funding to participate in payment-by-results contracts, or community organisations needing support to take over community assets.
The coming year
Going forward, O’Donohoe said Big Society Capital would be working with large grantmakers to help communities take ownership of their assets:
“We want to develop a one-stop-shopping place for grants, loans and advice. The problem for small community organisations is that it is very difficult to navigate the cocktail of grants, investment and advice they need to help them.”
O’Donohoe also said there were big opportunities for social enterprise in health and education: “We have a competitive advantage as trust is so important in these sectors,” he said. Big Society Capital is already working with the Young Foundation and the Private Equity Foundation to research the opportunities for social investment in education.
He also said Big Society Capital was planning two separate funds committed to social investment in the health area.
O’Donohoe also announced a partnership with the Northern Rock Foundation to capitalise social investment intermediaries in the North East of England. It will be the first of a potential number of regional funds in particular geographies across the UK.
Between £75m and £100m will be committed to up to 20 new investments over the next financial year.
Retail social investment
O’Donohoe emphasised the potential for retail social investment at the event, saying he was confident that a new social investment product for retail investors would emerge this year.
“We are working with three leading institutions on this,” he revealed.
Big Society Capital also plans to launch a second outcomes finance fund alongside the recently launched Bridges Social Impact Bond Fund. And in the next three to four months it hopes to launch a new fund focused on unsecured credit for the social sector.
To see the full annual report click here.
Editor's comment
Big Society Capital has had a bumpy first year. While it has generated some strong support and praise from within the social investment community and made a number of interesting deals, an emerging band of commentators have criticised its approach, arguing its finance won’t work for many charities and social enterprises. It’s likely the arguments will continue.
But, Nick Hurd, minister for civil society, made the poignant comment last night at Big Society Capital’s event that ultimately this new emerging social investment landscape is not about the intermediaries, or the commentators, or even the charities and social enterprises. “It’s about the young person in Liverpool who has their life chances increased through an intervention or the unemployed man in Manchester who’s got his life back on track through a socially-motivated franchise.”
This touching video by Big Society Capital highlights some of these people.
